Can leasehold service charges be paid as Housing Benefit - HB reg12

Can someone help please - we are a housing association with a number of leasehold properties that are owned by the leaseholder on a 75% basis with no rent payable on the remaining 25% but where the leaseholder is liable to pay a service charge as a condition of occupying the property.

My question is this - Does HB reg 12(1)(e) and 12(2)(a) apply to this payment or would reg 12(2)(b) and (c) override and preclude payment of the service charge as Housing Benefit?

The definition of “owner” doesn’t currently include leaseholders (HBR 2(1)). Therefore, your client is not barred by HBR 12(2)(c).

However, if the arrangement is other than by way of shared ownership, payments made under a long tenancy will be barred under 12(2)(a). A long tenancy is one that exceeds 21 years (definition in HBR 2(1)).

It gets a bit more complicated if the “service charges” are payable under an agreement other than the long lease/tenancy. The considerations are then:

1) Are the charges a condition of occupation; AND
2) Are the charges in connection with the provision of adequate accommodation?

Both elements must be satisfied. The first element is something the contractual terms will cover. The second is more of a hudgement call, but existing caselaw makes it clear the the “adequate accommodation” aspect must be read narrowly.

In my experience, most long leaseholders tend not to be able to satisfy the condition of occupation and in connection with the provision of adequate accommodation provisions. But, that’s a broad sweeping statement and your client’s case will be down to its own merits.

Thanks for your reply - so, can I just make sure that I have this right?

If our leasehold agreement is done on a shared ownership basis of 75/25 (regardless of whether rent is payable on the 25% bit) then the service charge should be considered under 12(1)(e) as housing benefit.

If it is not done on a shared ownership basis and the lease is longer than 21 years then it cannot be considered unless the agreement is other than under a long lease - I doubt that this is actually the case but I will check with the leasehold dept..

I assume that when our leaseholders choose to buy on a 50/50 basis and pay rent on the other 50% then the rent and the service charge is considered under 12(1)(i) am I right? And, if this is the case will the whole service charge be taken into consideration or just 50% of it?

The other thing I need to know is, where someone is entitled to Pension Credit and the housing cost is allowed but it doesn’t cover the whole charge can the part which is not allowed as a housing cost by PCr be considered under 12(1)(e) - assuming the conditions we have discussed above are met - and what is done to ensure that the service charge is not paid in duplicate by the HB dept and the PS - which dept takes first responsibility?

This is all very complicated and, to coin a colloquialism, it is doing my head in! It’s bad enough trying to establish and monitor what the DWP will allow as housing costs without having to consider which authority to opt for and what each will pay!

Lasa is the trading name of Lasa Charity UK Limited, a registered charity in England and Wales. Charity Reg No: 800140. It is a private company limited by guarantee, registered in England and Wales. Company Reg No: 1794098. Registered office: Kinnaird House, 1 Pall Mall East, London SW1Y 5BP. VAT No 524965032

LEGAL NOTICE: The content on this site is subject to a disclaimer and a copyright notice. By using the site, you consent to our use of cookies.